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Despite pressing needs, Metro leaves money for capital projects unspent Despite pressing needs, Metro leaves money for capital projects unspent
(about 3 hours later)
Late last year, Metro found a solution to its budget woes: It would use unspent money from its capital program to fill a yawning gap in its operating budget for the coming fiscal year.Late last year, Metro found a solution to its budget woes: It would use unspent money from its capital program to fill a yawning gap in its operating budget for the coming fiscal year.
But the proposal to shift roughly $64 million puzzled some board members. Chiefly, in a system grappling with a long list of needed safety upgrades and a massive backlog of maintenance and repair issues, why hasn’t Metro spent all the money allocated for that purpose? But the proposal to shift about $64 million puzzled some board members. Chiefly, in a system grappling with a long list of needed safety upgrades and a massive backlog of maintenance and repair issues, why hasn’t Metro spent all the money allocated for that purpose?
[Metro’s proposed FY 2016 budget focuses on customers][Metro’s proposed FY 2016 budget focuses on customers]
In a report to be presented to board members Thursday, staff members cite a combination of factors. Large complex projects, such as rehabilitating the Red Line, often involve multiple contractors and take time to sort out. In the case of the Royal Street Bus Garage, a project on which the agency has yet to make significant progress, Metro says it’s because they ran into community opposition and permitting problems. In a report to be presented to board members Thursday, staff members cite a combination of factors. Large complex projects, such as rehabilitating the Red Line, often involve multiple contractors and take time to sort out. In the case of the Royal Street Bus Garage, a project on which the agency has yet to make significant progress, Metro says it’s because of community opposition and permitting problems.
But the report also notes that Metro faces internal problems in the way it awards and manages contracts and the projects themselves. But the report also notes that Metro has internal problems in the way it awards and manages contracts and the projects themselves.
The result: After five years, about one-quarter of the $5 billion allocated in 2011 for the agency’s capital program remains unspent.The result: After five years, about one-quarter of the $5 billion allocated in 2011 for the agency’s capital program remains unspent.
“Insufficient management controls were put into place to establish formal processes and procedures to initiate projects, efficiently monitor progress based on scope and schedule and validate budget requests for future years based on schedule,” the report says.“Insufficient management controls were put into place to establish formal processes and procedures to initiate projects, efficiently monitor progress based on scope and schedule and validate budget requests for future years based on schedule,” the report says.
For example, there are several instances cited in which projects were approved by the board but did not move forward as planned.For example, there are several instances cited in which projects were approved by the board but did not move forward as planned.
It notes that two years after the board approved 19 new projects designed to address recommendations from the National Transportation Safety Board in the aftermath of the 2009 Red Line crash that killed nine people, Metro had not awarded contracts for a significant portion of that work, and much of the money allocated had not been spent. It notes that two years after the board approved 19 new projects designed to address recommendations from the National Transportation Safety Board in the aftermath of the 2009 Red Line crash, which killed nine people, Metro had not awarded contracts for a significant portion of that work, and much of the money allocated had not been spent.
It wasn’t until fiscal year 2013 that the agency began spending more of the money set aside to fund the recommendations. Currently, 93 percent of the money allocated for safety upgrades related to the Red Line crash has been invested, the report noted. It wasn’t until fiscal 2013 that the agency began spending more of the money set aside to fund the recommendations. Currently, 93 percent of the money allocated for safety upgrades related to the Red Line crash has been invested, the report noted.
In another example, plans to purchase replacement buses in fiscal year 2011 were delayed because the new bus contract was issued late; therefore, delivery and payment for the vehicles did not occur until fiscal year 2012. In another example, plans to purchase replacement buses in fiscal 2011 were delayed because the new bus contract was issued late. Therefore, delivery and payment for the vehicles did not occur until fiscal 2012.
The report notes, however, that several of the capital projects that were part of the five-year plan were completed.The report notes, however, that several of the capital projects that were part of the five-year plan were completed.
New stairs were installed at Bethesda and Foggy Bottom, and platforms at 10 stations, including Deanwood, White Flint and Shady Grove, were repaired. As part of the effort to address NTSB safety recommendations, Metro replaced 2,085 of its 2,351 track circuits. The federal board had cited a failure in track circuit modules as a factor in the 2009 Red Line crash.New stairs were installed at Bethesda and Foggy Bottom, and platforms at 10 stations, including Deanwood, White Flint and Shady Grove, were repaired. As part of the effort to address NTSB safety recommendations, Metro replaced 2,085 of its 2,351 track circuits. The federal board had cited a failure in track circuit modules as a factor in the 2009 Red Line crash.
“This is the first time I’m really seeing comprehensively how we’re doing,’’ said Metro board Chairman Mortimer L. Downey. “Not just what we are spending, but what’s being done.” “This is the first time I’m really seeing comprehensively how we’re doing,’’ said Metro’s board chairman, Mortimer L. Downey. “Not just what we are spending, but what’s being done.”
Downey said the report offers a good framework for understanding where the money is going and what can be done to improve how Metro manages its multibillion-dollar capital program. And he said that while it is not unusual for large agencies to have money left over in their capital budgets, Metro might be better served by streamlining its planning and management processes to ensure the money is being spent — and spent wisely. Downey said the report offers a good framework for understanding where the money is going and what can be done to improve how Metro manages its multibillion-dollar capital program. And he said that while it is not unusual for large agencies to have money left over in their capital budgets, ­Metro might be better served by streamlining its planning and management processes to ensure the money is being spent — and spent wisely.
Metro “should get closer to its target budget,” he said.Metro “should get closer to its target budget,” he said.
Board member Tom Bulger, who has extensive experience in capital budget planning, also said it is not unusual for capital dollars to go unspent.Board member Tom Bulger, who has extensive experience in capital budget planning, also said it is not unusual for capital dollars to go unspent.
Still, both are wary of the proposal to use some of that money to fill gaps in the transit agency’s operating budget.Still, both are wary of the proposal to use some of that money to fill gaps in the transit agency’s operating budget.
“I’m not keen on it because it’s a patch,” Bulger said. “You end up deferring capital projects that would otherwise be funded with those funds.”“I’m not keen on it because it’s a patch,” Bulger said. “You end up deferring capital projects that would otherwise be funded with those funds.”
Downey, too, has concerns.Downey, too, has concerns.
“It’s easy to say ‘We’ve got all this capital cash; let’s put more to pay for things that from an accounting standpoint are operational,’ ” he said. “But it’s a temporary bridge.” “It’s easy to say, ‘We’ve got all this capital cash; let’s put more to pay for things that from an accounting standpoint are operational,’ ” he said. “But it’s a temporary bridge.”
Metro staff, who unveiled the budget proposal to board members in December, billed the plan as a one-time strategy designed to give recently hired general manger Paul J. Wiedefeld breathing room to set his own priorities as he sorts through the myriad issues facing Metro. Metro staff, who unveiled the budget proposal to board members in December, billed the plan as a one-time strategy designed to give recently hired general manger Paul J. Wiedefeld breathing room to set his own priorities as he sorts through myriad issues facing Metro.
For the fiscal year that begins July 1, budget officials are projecting a 5 percent decline in revenue — from $938 million to $890 million. The proposed budget calls for $1.7 billion in spending for daily operations, $845.3 million of which would come from contributions from the local jurisdictions served by Metro. The proposed overall spending plan is roughly $3 billion.For the fiscal year that begins July 1, budget officials are projecting a 5 percent decline in revenue — from $938 million to $890 million. The proposed budget calls for $1.7 billion in spending for daily operations, $845.3 million of which would come from contributions from the local jurisdictions served by Metro. The proposed overall spending plan is roughly $3 billion.
As part of the effort to close the projected shortfall, budget staffers proposed using roughly $64 million in federal grant money that flows to Metro’s capital program for preventive maintenance costs that were previously paid out of the operating budget. As part of the effort to close the projected shortfall, budget staffers proposed using about $64 million in federal grant money that flows to Metro’s capital program for preventive-maintenance costs that were previously paid out of the operating budget.
An additional $2 million in savings would come from cutting administrative expenses, and $20 million in savings would come from a “board efficiency work plan.”An additional $2 million in savings would come from cutting administrative expenses, and $20 million in savings would come from a “board efficiency work plan.”
The shift, along with the other proposals, would spare the agency from having to raise fares or cut service. Proposals for fare increases and service cuts were rejected by board members — particularly those representing the District — when first broached last year because, they said, confidence in the system had been shaken by a fatal smoke incident and by chronic service disruptions. Ridership is down, and board members feared a fare hike would only drive more away.The shift, along with the other proposals, would spare the agency from having to raise fares or cut service. Proposals for fare increases and service cuts were rejected by board members — particularly those representing the District — when first broached last year because, they said, confidence in the system had been shaken by a fatal smoke incident and by chronic service disruptions. Ridership is down, and board members feared a fare hike would only drive more away.
[DC officials vow to block Metro fare increases, service cuts][DC officials vow to block Metro fare increases, service cuts]
Some board members who initially expressed concern about the idea of using capital dollars for operations now say they might be willing to support the proposal with conditions.Some board members who initially expressed concern about the idea of using capital dollars for operations now say they might be willing to support the proposal with conditions.
“As long as this is a one-shot deal that’s not going to force an increase in jurisdictional subsidy [for capital projects] in 2017, it’s probably something we can allow to go forward to give the new [general manager] a year to really get a better understanding of what should be in operating and what should be in the capital budget,” said Michael Goldman, who represents Maryland on the board.“As long as this is a one-shot deal that’s not going to force an increase in jurisdictional subsidy [for capital projects] in 2017, it’s probably something we can allow to go forward to give the new [general manager] a year to really get a better understanding of what should be in operating and what should be in the capital budget,” said Michael Goldman, who represents Maryland on the board.